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Where should the self-employed start this new tax year?

By: GoSimpleTax

Date: 21 April 2020

The new tax year started on 6 April – that is all we do know for sure.

At times it felt like everything else changed and at a very quick pace. Our world slowed down – working from home where possible, home schooling our children, the message #StayHomeSaveLives plastered on windows with rainbows.

People settled into ways of working from home with daily routines including video calls to keep connected with fellow employees, following pop quizzes on the radio or simply taking time to reflect. Kids followed online PE lessons, craft tutorials and Disney princesses via online platforms while parents worked.

How can you be more productive during the coronavirus lockdown?

One main cause for concern is money. Knowing your financial position helps you plan ahead. By getting all the paperwork ready for your 2019/20 tax return – you can run the calculations and check your income and tax liability.

Digital copies of receipts and paperwork can be saved allowing for a clear out of the home office.

Using up-to-date software, it has never been easier to file your return and make the most of your tax-free allowances. It will do all the calculations for you and, thanks to features that allow you to take a picture of expenditure, upload expenditure to your records along with all forms of income.

With all the documentation you need in one place, and learning resources to help minimise your tax liability further, all that’s left for you to do is press submit and cross another job off the list.

Whilst you do not have to submit your return right now, being safe in the knowledge of your expected tax outgoings means you can focus on sales and plan for the future.

Need help with your self assessment tax return?

GoSimpleTax makes your self assessment tax return quick and easy, helping you figure out which expenses and allowances you can claim.

The Government stepped up and offered financial support

As the pandemic picked up pace and businesses were restricted by the Government, the self-employed sat waiting and hoping for a lifeline. Chancellor Rishi Sunak gave them the Self-Employment Income Support Scheme.

The scheme is open to self-employed individuals or a member of a partnership who:

have submitted their Income Tax Self-Assessment tax return for the tax year 2018/19

were trading in the 2019/20 tax year

are trading when they apply, or would be except for COVID-19

intend to continue to trade in the tax 2020/21 tax year

have lost trading/partnership trading profits due to COVID-19

Note: your 2018/19 self-assessment tax return had to be filed by 23 April 2020 to be eligible for this scheme.

A further helping hand was offered for anyone who uses Payments on Account. The normal payment (which would be due on 31 July) has been deferred until 31 January 2021.

VAT payments due before 30 June 2020 have also been deferred. These will not need to be made until 31 March 2021. However, you will still be required to file your VAT return.

There were earlier announcements made by the Chancellor back in March 2020 with an emergency £330 billion financial package to bolster the UK economy. These included a business rates holiday and for struggling firms, loans.

There was also a postponement of the controversial tax reforms to off-payroll working rules, more commonly known as IR35. These have been postponed until April 2021 to help ease some of the strain from the pandemic and the effect it is having on businesses and individuals.

New tax rates and thresholds

In 2019, it was announced that the personal allowance would be increasing from £11,850 to £12,500. Thanks to the increase, tax brackets in the UK were also pushed back. The basic rate limit was increased to £37,500 and the higher rate threshold was set at £50,000.

In April 2020, the Capital Gains Tax allowance (the amount you can make form the increased value of your possessions tax-free) was increased to £12,300. Anything above the allowance, will be taxed at 18% for basic-rate taxpayers and 28% for additional-rate taxpayers.